The U.S. Financial Services Committee’s Subcommittee on Capital Markets held a hearing examining how proxy advisory firms influence corporate governance and shareholder voting, with a focus on Institutional Shareholder Services (ISS) and Glass Lewis. Members and witnesses highlighted the market’s high concentration, with ISS and Glass Lewis described as controlling about 97 percent of proxy advisory services, and argued that their recommendations can effectively steer vote outcomes, including where large index funds align votes with proxy advice. Testimony also raised concerns about the firms’ lack of fiduciary obligations to underlying investors, the use of standardized voting guidelines, potential conflicts from selling consulting services to issuers on matters subject to the firms’ voting recommendations, and limited transparency and accountability. Witnesses further pointed to proxy advisors’ role in vote execution, including ownership or control of software platforms used to transmit votes to tabulators, and described instances where voting decisions may be submitted on clients’ behalf.
U.S. Financial Services Committee 2025-04-29
U.S. Financial Services Committee Capital Markets Subcommittee holds hearing on ISS and Glass Lewis proxy advisory influence
The U.S. Financial Services Committee’s Subcommittee on Capital Markets examined the influence of proxy advisory firms, focusing on Institutional Shareholder Services and Glass Lewis, which control about 97% of the market. Concerns were raised about their impact on vote outcomes, lack of fiduciary obligations, potential conflicts of interest, and limited transparency. The hearing also addressed issues related to vote execution and control over voting software platforms.